JBS NV is closing a beef plant in Pennsylvania, in the latest sign of pressures meatpackers are facing amid a severe US cattle shortage.
In addition to the beef production facility in Souderton, Pennsylvania, the world’s largest meat supplier also said it is closing a value-added facility in Memphis, Tennessee, that packages various proteins. The closures come as the company last month said it faced widening losses in its US beef unit.
The US cattle herd is at a 75-year low, as ranchers wrestling with drought and high production costs have had to cull more animals. Dryness, which is deepening again, is poised to further delay the process of rebuilding herds, Wesley Batista Filho, chief executive officer of JBS USA, said during a May conference call.
The return of the parasitic New World screwworm in Texas is also raising uncertainty for the industry, potentially delaying a rebuild of the US herd and the resumption of live cattle shipments from Mexico to the US.
The outlook for that trade, which has been largely halted since late 2024, has become more complicated, making capacity reductions “the most likely mechanism for industry rebalancing,” said Citi Research analysts Renata Cabral and Luis Felipe Terzariol.
“JBS has now moved faster than we expected,” the analysts wrote in a Friday note. “For a company that has historically maintained its US Beef footprint through prior cattle cycles, today’s announcement underscores the exceptional nature of the current environment.”
Production from the affected JBS facilities will be shifted to other plants, the company said. The Souderton plant has more than 1,700 employees and a daily slaughter capacity of about 2,000 head of cattle, making it one of the biggest plants on the East Coast. The Citi analysts estimate that the facility represents about 8% of JBS’s beef processing capacity in the US.
JBS’s closure is the latest move from meatpackers to maximize efficiency and reduce capacity in line with lower cattle supplies. JBS late last year already said it would shut a facility in California. Peers Tyson Foods Inc. and Cargill Inc. have also closed plants in Nebraska and Milwaukee, respectively. A measure of beef processing margins from HedgersEdge has been largely negative for the last year and a half, even as record consumer prices have drawn antitrust scrutiny from the Trump administration.
Beef profits, initially expected to recover in the second half of 2027, are now more likely to occur in fiscal year 2028, Barclays analysts said earlier this week.
JBS said Friday’s actions are part of a broader strategy to modernize operations, and its investments in facilities in other states “are focused on growing our prepared foods and value-added capabilities, modernizing operations, and enhancing the company’s ability to serve customers,” according to a statement.
Production from the affected JBS facilities will be shifted to other plants, the company said. The Souderton plant has more than 1,700 employees and a daily slaughter capacity of about 2,000 head of cattle, making it one of the biggest plant on the East Coast.
JBS shares rose as much as 2.9% on Friday to the highest price in two weeks.
Written by: Ilena Peng @Bloomberg
The post “JBS to Close Pennsylvania Beef Plant Amid Cattle Shortage” first appeared on Bloomberg